DCIT, Circle-7, Kolkata, Kolkata V. M/S. World Wide Safety (P) Ltd., Kolkata

ITA 1678/KOL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4635 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 20-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 14-08-2014
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARYA
• Assessee Lawyers: ARVIND AGARWAL
• Section: 80HHC; 10B; 263

Judgement Text

I.T.A. NO. 1678/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1678/KOL/ 2014 ASSESSMENT YEAR: 2008-2009 DEPUTY COMMISSIONER OF INCOME TAX,................. ...........APPELLANT CIRCLE-7, KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. WORLD WIDE SAFETY PVT. LIMITED,............... .............RESPONDENT 5A, ROBINSON STREET, KOLKATA-700 017 [PAN : AAACW 3085 G] APPEARANCES BY: SHRI ARINDAM BHATTACHARYA, JCIT, SR. D.R., FOR THE DEPARTMENT SHRI ARVIND AGARWAL, ADVOCATE, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JUNE 20, 2016 DATE OF PRONOUNCING THE ORDER : JUNE 22, 2016 O R D E R PER SHRI S.S. VISWANETHRA RAVI :- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLKATA DATED 09.05.2014 FOR THE ASSESSMENT YEAR 2008-09. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-CO MPANY IS A 100% EXPORT ORIENTED MANUFACTURING UNIT AND DURING THE Y EAR UNDER REVIEW, THE ASSESSEE-COMPANY WAS ENGAGED IN MANUFACTURING A ND EXPORT OF SEAMLESS KNITTED OR CROCHETED TEXTILE GLOVES, INDUS TRIAL LEATHER GLOVES WITH KNITTED LINING INSIDE, SYNTHETIC/COTTON KNITTE D GLOVES COVERED IN PVC/LATEX/NITRIL, ETC. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 30.09.2008 DECLARI NG TOTAL INCOME AT NIL. THE RETURN WAS PROCESSED UNDER SECTION 143(1) ON 12 .06.2009 ACCEPTING THE RETURNED INCOME. I.T.A. NO. 1678/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 2 OF 5 3. IN THE COMPUTATION OF INCOME, THE ASSESSEE COMPA NY CLAIMED DEDUCTION U/S 10B. FOR THE PERIOD UNDER REVIEW, DED UCTION OF RS.6,21,44,550/- WAS CLAIMED UNDER SECTION 10B AS P ER THE FORM 56F SUBMITTED ALONG WITH THE TAX AUDIT REPORT. TOTAL EX PORT TURNOVER AS DECLARED BY THE ASSESSEE-COMPANY WAS RS.26,68,72,66 6/- AND THE ASSESSING OFFICER COMPUTED THE DEDUCTION UNDER SECT ION 10B AT RS.5,84,95,944/- AND EXCESS THEREON WAS DISALLOWED TO AN EXTENT OF (RS.6,21,44,550/- MINUS RS.5,84,95,944/-) RS.36,48, 606/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE.. 4. ON APPEAL, THE LD. CIT(APPEALS) DELETED THE ADDI TION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS CLAIM OF DED UCTION UNDER SECTION 10B BY OBSERVING IN HIS IMPUGNED ORDER AS UNDER:- I HAVE GONE THROUGH THE WRITTEN SUBMISSION, THE ASSESSMENT ORDER AND THE OTHER MATERIALS ON RECORD. IT IS OBSERVED THAT THE JURISDICTIONAL TRIBUNAL IN THE CA SE OF THE APPELLANT HAS FOR THE AY 2003-04, 2004-05 AND 2006- 07 HELD THAT EXCLUSION/DEDUCTION OF EXCHANGE RATE FLUC TUATION, CLEARING AND FORWARDING CHARGES AND COURIER CHARGES ARE NOT PERMISSIBLE IN DETERMINING THE TOTAL TURNOVER A ND EXPORT TURNOVER WITH REFERENCE TO COMPUTING THE DED UCTION UNDER SECTION 10B. FURTHER, FROM A READING OF FORM 56G, IT IS OBSERVED THAT LOCAL SALES OF RS.32,692/- HAS ALR EADY BEEN CONSIDERED WHILE COMPUTING THE EXPORT TURNOVER. THEREFORE, THE AO IS DIRECTED TO RECOMPUTE DEDUCTIO N UNDER SECTION 10B FOLLOWING THE PRINCIPLES LAID DOWN BY T HE JURISDICTIONAL TRIBUNAL IN THE APPELLANTS OWN CASE FOR THE ABOVEMENTIONED ASSESSMENT YEARS. GROUND NOS. 2 AND 3 ARE DISPOSED OFF ACCORDINGLY. BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE TH E TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US, THE LD. D.R. R ELIED ON THE ORDER OF ASSESSING OFFICER. ON THE OTHER HAND, LD. COUNSEL F OR THE ASSESSEE HAS RELIED ON THE ORDER OF LD. CIT(APPEALS). HE ALSO RE LIED ON THE DECISION DATED 10.11.2006 OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 IN ITA NO. 1539/KOL/2006. I.T.A. NO. 1678/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 3 OF 5 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSU E UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECISION DATED 10.11.200 6 OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 IN ITA NO. 1539/KOL/2006, WHEREIN IT WAS HELD AS UNDER:- WE FIND FROM THE AUDITORS REPORT THAT THE APPELLAN T COMPANY IS A 100% EXPORT ORIENTED UNDERTAKING AND H AS MADE AN EXPORT TURNOVER OF RS.9,17,63,625/- WHICH I S ALSO THE TOTAL TURNOVER. WE FURTHER FIND THAT THE AUDITO RS WHILE CALCULATING THE DEDUCTION U/S 10B OF THE ACT, 1961 AT RS.2,05,61.516/- HAD DETERMINED THE EXPORT TURNOVER BY EXCLUDING FREIGHT OF RS.59,17,681/-AND INSURANCE OF RS.2,36.510/-. WE ALSO FIND THAT IN THE INSTANT CAS E THE TOTAL TURNOVER AND EXPORT TURNOVER ARE SAME. WE FIND THAT EXPLANATION 2 UNDER SECTION 10B READS AS UNDER :- '(III) EXPORT TURNOVER' MEANS THE CONSIDERATION IN RESPECT OF EXPORT [BY THE UNDERTAKING] OF ARTICLES OR THINGS OR COMPUTER SOFTWARE RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE IN ACCORDANCE WITH SUB-SECTION (3), BUT DOES NOT INCLUDE FREIGHT, TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY O F THE ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA OR EXPENSES, IF ANY, INCURRED IN FOREIGN EXCHANGE IN PROVIDING THE TECHNICAL SERVICES OUTSID E INDIA; ' 6.3. WE FIND THAT EXPLANATION TO (B) UNDER SUB SECT ION (4C) OF SECTION 80HHC READS AS UNDER :- '(B) 'EXPORT TURNOVER' MEANS THE SALE PROCEEDS [RECEIVED IN, OR BROUGHT INTO INDIA] BY THE ASSESSESEE IN CONVERTIBLE FOREIGN EXCHANGE [IN ACCORDANCE WITH CLAUSE (A) OF SUB-SECTION (2)] OF ANY GOODS OR MERCHANDISE TO WHICH THIS SECTION APPLIES AND WHICH ARE EXPORTED OUT OF INDIA BUT DOES NOT INCLUDE FREIGHT OR INSURANCE ATTRIBUTABLE TO THE TRANSPORT OF THE GOODS OR MERCHANDISE BEYOND THE CUSTOMS STATION AS DEFINED IN THE CUSTOMS ACT, 1962 (52 OF 1962);J 6.4. WE FURTHER FIND EXPLANATION (BA) UNDER SUB-SEC TION (4C) OF SECTION 80HHC READS AS UNDER :- '[BA) 'TOTAL TURNOVER' SHALL NOT INCLUDE FREIGHT OR INSURANCE ATTRIBUTABLE TO THE TRANSPORT OF THE GOOD S OR MERCHANDISE BEYOND THE CUSTOMS STATION AS DEFINED IN THE CUSTOMS ACT, 1962 (52 OF 1962) : I.T.A. NO. 1678/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 4 OF 5 PROVIDED THAT IN RELATION TO ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1 ST DAY OF APRIL 1991, THE EXPRESSION 'TOTAL TURNOVER' SHALL HAVE EFFECT A S IF IT ALSO EXCLUDED ANY SUM REFERRED TO IN CLAUSES (IIIA), (IIIB) [(IIIC), (IIID) AND (IIIC) OF SECTIO N 28'. 6.5. WE FIND FROM THE VARIOUS JUDICIAL PRONOUNCEMEN TS RELIED ON BY THE LD. COUNSEL, THE DEFINITION OF TOTAL TURN OVER EXCLUDES INCIDENTAL EXPENSES SUCH AS FREIGHT, OCTRO I INSURANCE AND SALES TAX, ETC. 6.6. WE ALSO FIND FROM THE VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE THAT WHERE THERE I S AN INCENTIVE PROVISION PROVIDED UNDER THE LAW, THE SAM E SHOULD BE LIBERALLY CONSTRUED. 7. CONSIDERING THE TOTALITY OF THE FACTS OF THE CAS E AND CONSIDERING THE FACT THAT IN THE INSTANT CASE THE T OTAL TURNOVER AND EXPORT TURNOVER ARE SAME, IN OUR OPINI ON, THE LD. CIT WAS NOT JUSTIFIED IN ASSUMING JURISDICTION UNDER SECTION 263 AND DIRECTING THE AO NOT TO EXCLUDE THE FREIGHT AND INSURANCE FROM THE TURNOVER WHILE COMPUTING DED UCTION U/S 10B OF THE I.T. ACT. THEREFORE, WE SET ASIDE TH E ORDER OF THE LD. CIT AND THE GROUNDS RAISED BY THE APPELLANT ARE ALLOWED. 7. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDER ATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO IS SIMILAR TO A .Y. 2003-04, WE RESPECTFULLY FOLLOW THE DECISION OF THIS TRIBUNAL R ENDERED FOR THE SAID YEAR AND UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A PPEALS) DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF EXCESS CLAIM OF DEDUCTION UNDER SECTION 10B. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 22, 2016 . SD/- SD/- (M. BALAGANESH) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER KOLKATA, THE 22 ND DAY OF JUNE, 2016 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7, KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 I.T.A. NO. 1678/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 5 OF 5 (2) M/S. WORLD WIDE SAFETY PVT. LIMITED, 5A, ROBINSON STREET, KOLKATA-700 017 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-VIII, KOL KATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.